Manufacturing firm wants withholding tax removed
Rab Processors Limited, an agro industry firm specialising in value addition and trading of locally-grown produce, has asked government to consider removing taxes that buyers withhold when buying produce from farmers.
The company’s deputy managing director, Ahmed Sunka, speaking in person to President Peter Mutharika last Friday at the opening of the 27th Malawi International Trade Fair (Mitf) in Blantyre, said withholding taxes are disadvantaging farmers, hence the need for government to review the tax policy.
“To buy produce from farmers, we have to deduct three percent withholding tax. In so doing, government is subsidising them on one hand and taxing them on the other,” he said when Mutharika toured the pavilion during the opening of the fair.
Sunka observed that the majority of farmers are being exploited as they cannot demand better prices from traders who usually buy produce at cheap prices on the pretext that they incur more costs to transport them to town.
“The farming community is not coming to town to sell their produce directly to processors such as us. This means a farmer cannot maximise profits from his produce. Instead, it is traders who benefit in between,” he said.
Sunka pleaded with government to consider revising value added taxes (VAT) government imposes on locally-made products, saying the tax is pushing the prices of the products up while prices of imported items fall.
This, in turn, contributes to underperformance by the majority of local manufacturers, he said.
“At present, there is VAT on soap produced locally. But when you import soap from outside the country such as Tanzania and Mozambique, there is no VAT, hence their soap is cheaper than the locally-made one. This is not helping the local industry in the end,” complained Sunka.
In his response, Mutharika promised that government will look into the concerns.
He said government remains committed to the promotion of industrialisation as one way of creating jobs and growing the economy.
Mutharika, who was in the presence of Minister of Industry and Trade Joseph Mwanamvekha, asked the minister to find out if the concerns can be addressed.
